Over 15 million jobs at stake unless package announced immediately: FIEO

Need interest free loans, limited opening of manufacturing units soon, the Federation of Indian Export Organisations said

With more than 50 per cent of export orders currently getting cancelled, the export sector is expected to see massive job losses estimated at at least 15 million, unless a targeted economic relief package is announced soon, the Federation of Indian Export Organisations (FIEO) has told the government.

"We are left with very less orders and if factories are not allowed to work with a minimum work force to execute them timely, many of them will suffer irreparable losses and bringing them to the brink of closure as they are saddled with fixed cost, which in any case has to be absorbed by them," said FIEO President Sharad Kumar Saraf. Rising instance of non performing assets among exporting units is also inevitable, Saraf stressed.

Global trade is expected to fall by 13-32 per cent in 2020 as the coronavirus disease (Covid-19) pandemic disrupts economic activity and life around the world, the World Trade Organization (WTO) said on Wednesday. The current slump will prove to be biggest of a generation, bigger than the global financial crisis of 2008-09, WTO said in its Annual Trade Statistics and Outlook Report. The report also pointed out that in 2019, 1.7 per cent of world exports originated from India, while 2.5 per cent of imports reached the country.

Saraf has urged the government to immediately provide a series of financial incentives and policy changes that may allow them to reduce their losses. Prime among this is the demand to allow exports related manufacturing begin immediately with minimum work force. The industry body also wants Covid Interest free Working Capital Term Loan to be provided to exporters to cover the cost of wages, rental and utilities.

At the same time, exporters should be given a waiver from paying into Employees' Provident Fund Organisation and Employees' State Insurance Corporation funds for 3 months, from March to May, 2020, FIEO has said. It has reiterated its earlier demand of extension of Pre and Post shipment credit by 90-180 days on their maturity, Roll over of forward cover without interest and penalty. Also, it has pushed automatic enhancement of limit by 25 per cent to address liquidity challenges and extension of interest equalisation benefits.

Saraf also pointed out that major financial support released by other nations to prop up their respective export sectors would put Indian exports in further difficulties as competition increases with a focus on prices.

India’s exports had caught a rare breather in February, rising after six months before Covid-19 struck. After February’s modest 2.91 per cent growth, total exports stood at $292 billion in the first 11 months of financial year 2019-20 (FY 20). But FIEO expects contraction to take hold of the sector from March onwards as already weak global demand and the nationwide lockdown reduced shipment volume.